Understanding Corning's drop

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
McCharley
Posts: 365
Joined: Tue Apr 12, 2011 5:45 pm

Understanding Corning's drop

Post by McCharley »

Although most of the talk on here is (rightfully) on index funds, I'm sure many of you are savvy investors in individual stocks as well.

I've always liked Corning's spirit of innovation and have been keeping an eye on their stock. Today it plunged 10% because quarterly income was down 53%. (!)

Here's their report: http://www.corning.com/news_center/news ... 12501.aspx

The thing is, sales were up 7%. This strikes me as odd. Anyone know what gives? :confused
User avatar
tipswatcher
Posts: 367
Joined: Tue Jun 21, 2011 5:17 pm
Contact:

Re: Understanding Corning's drop

Post by tipswatcher »

I own a small amount of Corning stock, at a small loss right now. (My play money account.) I think the outlook is negative because the TV market is highly questionable in the near future.

GLW is a nice company, innovative, in multiple markets with a good future, long-term.

Not that I am recommending it. Nope.
TIPS: Perfect investment for imperfect times?
sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: Understanding Corning's drop

Post by sscritic »

You need to look at last year's report to understand these numbers:
net sales: $1,765
net earnings: $1,044
User avatar
fishnskiguy
Posts: 2610
Joined: Tue Feb 27, 2007 1:27 pm
Location: Sedona, AZ

Re: Understanding Corning's drop

Post by fishnskiguy »

Turns out that the public likes 3D TVs about as much as they liked 3D movies back in 1955. Lots of folks thought we all would just HAVE to get a 3D TV. Nope.

Stick with index funds. :sharebeer

Chris
Trident D-5 SLBM- "When you care enough to send the very best."
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Understanding Corning's drop

Post by CaliJim »

Impossible to pick winners reliably, even if you spend all day doing it. This is why 2/3 of active funds underperform their indexes.
User avatar
dnaumov
Posts: 495
Joined: Tue Jul 27, 2010 6:04 pm
Location: Finland
Contact:

Re: Understanding Corning's drop

Post by dnaumov »

Corning is a great company with solid management and a balance sheet that is in very good shape, however:

Their fortunes are currently tied to their LCD glass business, since it accounts for more than 40% of their revenue and more than 70% of their earnings. They were already projecting that their margins in this area would be going down, but now they have revised their outlook to mention that they will be going down further and faster: Corning's customers are under very very heavy financial pressure and glass makers like Corning are one of the very few component manufacturers of things that go into TVs and LCDs that are actually making money right now, so this pressure gets tranferred onto them.

Corning is actively trying to diversify itself into other areas and these other areas are showing strong growth, however they are still just a blip on the radar when you look at the whole picture. If you have a division that is bringing in 70% of your total earnings and the margins of this division dive by 50%, your other divisions have to show ridiculously strong and unlikely growth in either volume or profitability or both, just for the company's earning power as a whole to stay even, let alone actually grow.

Right now the market is pricing Corning as a "no earning growth at all for the next 1-2 years" stock and I find no reason to disagree with Mr. Market's assesment of the situation. That being said, I would definately consider Corning a solid long-term buy at under 12$.
User avatar
greg24
Posts: 3970
Joined: Tue Feb 20, 2007 10:34 am

Re: Understanding Corning's drop

Post by greg24 »

Stocks go up. Stocks go down.
porcupine
Posts: 1267
Joined: Thu Nov 04, 2010 11:05 am

Re: Understanding Corning's drop

Post by porcupine »

greg24 wrote:Stocks go up. Stocks go down.
Slight modification required:

I buy. Stocks go down.
I sell. Stocks go up.
I try to stay away (for the most part).

Twelve years or so ago, I got burned by GLW. Haven't gone back to it.

- Porcupine
User avatar
thirdman
Posts: 202
Joined: Wed Nov 12, 2008 7:11 pm

Re: Understanding Corning's drop

Post by thirdman »

I have owned GLW off and on, and have done well with it. That being said, chasing or being prescient about technological change is extremely difficult unless one is directly involved. If one is privy to what will happen with OLED's and what companies will benefit, great. But in the field of material sciences, things are changing so rapidly, it is hard to predict what technology will become commercial, or who will benefit.

I have been interested in ceramics and materials for years. I bought Nordstrom shirts with Z-buttons made by Coors-Tek. I thing cars in the future will have bodies made from a stamped, cured, bolted and glued carbon fiber/some material frame. But who will commercialize the technology and benefit, I can not guess.

Buying Total Stock Market, or Total International guarantees you will own that company, just not on the ground floor.
User avatar
nisiprius
Advisory Board
Posts: 42551
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Understanding Corning's drop

Post by nisiprius »

fishnskiguy wrote:Turns out that the public likes 3D TVs about as much as they liked 3D movies back in 1955. Lots of folks thought we all would just HAVE to get a 3D TV. Nope.
Not to hijack the thread, but where did the belief in 3D come from? Stereoscopic photography was invented in 1838, cheap polarizers circa 1940, you'd think people would have a pretty good idea what it can and cannot do. 3D movies in 1950s didn't fail because they were too expensive, or because the technology was all that much worse than today's, or because you had to go to the theatre.

They failed because stereoscopy doesn't help tell most screen stories. And because it limits other cinematographic techniques (choices of lenses and angle) that do help tell stories. And because the more realistic one thing is, the more jolting traditional unrealistic conventions become. Even something as simple as a cut starts to feel weird to the extent that if you feel that you're physically inside the scene, then you feel as if you've physically moved, instantaneously. Does anyone know how often James Cameron cut in Avatar? I'd bet that he used longer scenes with fewer cuts then in Titanic.

And because geometrical relationship involving perspective means that heightened realism only exists for people sitting in a small region of the house--everywhere else, you get perspective distortion which passes unnoticed in flat pictures but makes the 3D pictures seem less realistic than flat ones. Being "right there" in a room shaped like an elongated rhombus has a certain "wow" factor, the way it used to have a "wow" factor to see actors walk across the screen and have their faces turn from green to flesh-colored to purple--wow, look, color!--but the novelty wears off.

Judging from a fairly recent viewing (10 years ago?) viewing of some 1950s 3D movies--"Miss Sadie Thompson" and "Kiss Me, Kate"--in a festival in Palo Alto, another factor could be that 3D is unflattering to actresses because the true contours of their face cannot be softened by makeup.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
interplanetjanet
Posts: 2226
Joined: Mon Jan 24, 2011 4:52 pm
Location: the wilds of central California

Re: Understanding Corning's drop

Post by interplanetjanet »

thirdman wrote:I have been interested in ceramics and materials for years. I bought Nordstrom shirts with Z-buttons made by Coors-Tek. I thing cars in the future will have bodies made from a stamped, cured, bolted and glued carbon fiber/some material frame. But who will commercialize the technology and benefit, I can not guess.
My favorite project of the Coors ceramics division was always the fuel elements for the Tory series nuclear ramjets for Project Pluto. They didn't publicize those much at the time. though. :)

-janet
User avatar
bertilak
Posts: 8065
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Understanding Corning's drop

Post by bertilak »

nisiprius wrote:... where did the belief in 3D come from?
I had the same thoughts when 3D TVs started to get pushed --- "Why? Are they nuts? 3D movies were a novelty/joke 50 years ago."

But then again, when I first heard of electric toothbrushes all those many years ago I couldn't believe THAT either. Now I have one I paid over $100 for! Had it for years.

Seems my TV insight is better than my toothbrush insight.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
User avatar
Midpack
Posts: 729
Joined: Fri Mar 14, 2008 9:34 am
Location: Chicagoland

Re: Understanding Corning's drop

Post by Midpack »

thirdman wrote:I thing cars in the future will have bodies made from a stamped, cured, bolted and glued carbon fiber/some material frame. But who will commercialize the technology and benefit, I can not guess.
After 20 years as an exec in composites including automotive, I can't imagine a set of circumstances that would lead to any meaningful volume. Niche market yes (high performance, conspicuous consumption and/or eco-chic), mainstream under what circumstances?
You only live once...
User avatar
thirdman
Posts: 202
Joined: Wed Nov 12, 2008 7:11 pm

Re: Understanding Corning's drop

Post by thirdman »

Midpack wrote:
thirdman wrote:I thing cars in the future will have bodies made from a stamped, cured, bolted and glued carbon fiber/some material frame. But who will commercialize the technology and benefit, I can not guess.
After 20 years as an exec in composites including automotive, I can't imagine a set of circumstances that would lead to any meaningful volume. Niche market yes (high performance, conspicuous consumption and/or eco-chic), mainstream under what circumstances?
Obviously I don't know what I am talking about. I guessed that technology would progress to something like chopped carbon fiber that could be put in molds, rather than hand laid, mass produced and fabricated. Even long carbon fibers could be laid by machine? Possibly ceramics or glass could be adapted to vehicle frames? I was basing my guess on the huge amount of research going on in materials, at both universities and companies. The stamped and welded steel skeleton of light vehicles is quite heavy. I imagined a vehicle with a rigid polymer fiber frame with composite body panels. The components would be modular, such as electric motor, electronics, battery pack, and glass dashboard. The car could be updated through software and component hardware.

When I was in school silicon planar technology was just beginning. Intel did not exist. Was Fairchild semiconductor the investment vehicle in 1968 or Intel? I cannot choose winners.
User avatar
Midpack
Posts: 729
Joined: Fri Mar 14, 2008 9:34 am
Location: Chicagoland

Re: Understanding Corning's drop

Post by Midpack »

Anything is possible of course,but FWIW...
thirdman wrote:I guessed that technology would progress to something like chopped carbon fiber that could be put in molds, rather than hand laid, mass produced and fabricated. Even long carbon fibers could be laid by machine? Both are already being done.
Possibly ceramics or glass could be adapted to vehicle frames? I was basing my guess on the huge amount of research going on in materials, at both universities and companies. I was aware of some but not all.
The stamped and welded steel skeleton of light vehicles is quite heavy. Dictated largely by physics for safety reasons. Safety has only become more of a selling point over time, not less. One of the reasons many Americans still covet large cars, and avoid small cars - a large lightweight car might be a real uphill battle for dealers.
I imagined a vehicle with a rigid polymer fiber frame with composite body panels. There are already fiberglass composite panels, the Corvette the most obvious (relatively expensive) example. Carbon fiber is much more expensive than glass fiber, and epoxy (best for carbon fiber) is much more expensive than polyester and vinyl ester resins - so carbon fiber composites are costly. And Fiberglass has never had a big share of body panels despite 50 years trying to penetrate the market. Fiberglass only make economic sense for low volume cars/parts, stamped steel still rules where volume is moderate or high - most of the market. If composites ever do break through that market in a big way, fiberglass will always be much cheaper than carbon fiber IMHO.
The components would be modular, such as electric motor, electronics, battery pack, and glass dashboard. The car could be updated through software and component hardware.

When I was in school silicon planar technology was just beginning. Intel did not exist. Was Fairchild semiconductor the investment vehicle in 1968 or Intel? I cannot choose winners.
You only live once...
User avatar
thirdman
Posts: 202
Joined: Wed Nov 12, 2008 7:11 pm

Re: Understanding Corning's drop

Post by thirdman »

Thanks, Midpack. It does pay to know what one is talking about. That's why I better stick to mutual funds.
User avatar
rob
Posts: 3436
Joined: Mon Feb 19, 2007 6:49 pm
Location: Here

Re: Understanding Corning's drop

Post by rob »

fishnskiguy wrote:Turns out that the public likes 3D TVs about as much as they liked 3D movies back in 1955. Lots of folks thought we all would just HAVE to get a 3D TV. Nope.
Gee what a surprise... If the marketing guru's asked a real person that would have been obvious :?
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
Post Reply